CEC financial results hit by KCM ops challenges

BUUMBA CHIMBULU writes OPERATIONAL challenges affecting Konkola Copper Mine (KCM) and Mopani Copper Mines (MCM) have negatively affected financial results for Copperbelt Energy Corporation (CEC) whose profit after tax has reduced by 78 percent. CEC total revenue decreased by three percent to US$408.272 million in 2019 from US$421.203 million in 2018 mainly on account of […]

CEC financial results hit by KCM ops challenges
BUUMBA CHIMBULU writes OPERATIONAL challenges affecting Konkola Copper Mine (KCM) and Mopani Copper Mines (MCM) have negatively affected financial results for Copperbelt Energy Corporation (CEC) whose profit after tax has reduced by 78 percent. CEC total revenue decreased by three percent to US$408.272 million in 2019 from US$421.203 million in 2018 mainly on account of an eight percent reduction in power demand by the mines and reduced wheeling services to non-mining consumers of 7 percent. Profit after tax was US$12.246 million compared to US$55.856 million in 2018, representing a decrease of 78 percent, says CEC Company Secretary, Julia Chaila. Ms Chaila explained that KCM was the subject of winding up proceedings commenced by ZCCM-IH while the planned smelter outage at MCM, for purposes of effecting plant overhaul, had the impact of reducing demand at the mine by about 35 percent.  She said the challenges at KCM had manifested in the customer failing to pay for power consumed, resulting in the company taking significant impairments during the year. “This remains a top concern for the business, requiring the Company to take measures to limit its exposure if the customer does not find a sustainable solution in the coming year,” Ms Chaila said in a statement announcing the 2019 audited financial results. Ms Chaila also said CEC expected the power demand to remain largely suppressed in the next one to two years. She explained that the key downside risks to demand in the short term included the mining fiscal regime, seen as being unfavourable by the mines, and the impact of Covid-19, which were yet to be fully understood at this stage. She however said the prospects for a rebound in demand going forward remained positive as most mine customers worked to return their operations to full capacity and new projects resumed ramping up demand over the next three to five years.  “Recent efforts by the Government to stabilize the mining sector and efforts across the globe to find a lasting solution to Covid-19 give us a measured sense of confidence that stability and focus on growth should return over the medium to long term,” Ms Chaila said. Ms Chaila also said CEC and Zesco, with the support of the Government, had continued negotiations to put in place a successor agreement to the Bulk Supply Agreement (BSA). She said efforts to close the gap on needed terms were continuing through the engagement of both Zesco and the Government. “The first round of negotiations ended without the parties agreeing due to outstanding differences on some key terms. “In our engagements with Zesco and Government, we continue to be guided by the principle of ensuring the endgame of the negotiations represents an equitable and win-win outcome for all parties,” Ms Chailasaid. The Sun